Becoming a new parent is undoubtedly one of life’s most transformative experiences. It ushers in a profound sense of joy, love, and fulfillment. It also, however, brings forth an array of new responsibilities, many of which revolve around ensuring your child’s welfare and security. Among these responsibilities, financial planning often takes center stage. Here, we will delve into why establishing a trust should be an essential part of conquering the financial aspects of your responsibilities as a new parent. We will explore the benefits of trusts to shed light on how they can provide security and peace of mind, safeguarding your child’s financial future while simplifying asset management.
The Benefits of New Parents Establishing a Trust
While drafting a will is a popular method of distributing assets after a person’s death, it may not always be the best option. For several reasons we will discuss here, new parents might want to consider a trust as an alternate means for asset distribution as a means to provide for their children and help guarantee their financial stability.
One big advantage of opting for a trust lies in avoiding probate. Probate, a legal process mandated when assets are distributed through a will, can be a time-consuming and expensive ordeal. Furthermore, it does not afford much in the way of family privacy as probate is a public process where your financial matters will become a matter of public record. Conversely, a trust allows for the direct distribution of assets to beneficiaries, circumventing probate. This not only saves valuable time and money but also preserves the privacy your family deserves.
For new parents, especially with young children or children with special needs, a trust can serve as a powerful instrument for providing for their kids. Within a trust, you can provide detailed instructions as to how and when assets are to be disbursed to your children. This level of control works to ensure that your child does not gain unrestricted access to a substantial sum of money at a young age, which could easily lead to financial mismanagement. Additionally, you can designate a trusted individual, whether a family member or a financial advisor, to oversee the management of trust assets on behalf of the trust beneficiaries, your children. This means that your children will receive the necessary financial support even if you are no longer present to provide it.
Beyond facilitating the orderly transfer of assets, a trust can also serve as a shield, protecting your hard-earned wealth from potential creditors. Trusts can also shield assets from divorce proceedings and other financial claims. This safeguarding feature is especially relevant for new parents who are in the early stages of building their financial legacy and want to help ensure that their assets remain intact for their children’s future.
Estate Planning Attorney
As you begin the remarkable journey into parenthood, do what you can to make sure your children are always provided for. Talk to the team at BoyesLegal, APC about setting up a trust. Contact us today.